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Goldman Sachs Earnings Transcript
Ok, unique snowflakes. Time to tear this apart... Judging by how many readers posted comments on the prior GS post and sent me emails (I wish I could analyze every angle), there should be enough brainpower here to fully digest the "one-time, non recurring, 4 month monster quarter." In the meantime, GS is finalizing the terms of its follow on: $123/share price, to be completed before market open.
One thing that caught my eye off the bat from the Q&A:
Question: Thanks, and cleanup on the exposures David. Could you provide us a where marks and exposure levels stood in March versus November for the hot spots, commercial real estate, leveraged loans, residential real estate, ALT-A, subprime.
David Viniar: Let me give you a couple of those and anything I don't answer, ask he into if I haven't given what you need. The commercial real state, we had at the end of the quarter market value of-- round numbers I'll give you, about $8.5 billion and about $1.5 billion was CMBS security sots real loan portion was about $7 billion and our average mark across there was something in the high 50s. The residential real estate for us, we just have a trading position at this point. We have nonagency residential real estate
We have roughly $4 billion split equal, roughly equally between prime ALT-A and subprime, and that is really a trading position. You know, it's going to go up or down over the course of any quarter at this point. I wouldn't call them legacy. Our leveraged loans, from the $52 billion of legacy loans that we had at the end of the third quarter of '07 which is when the credit crisis really hit, we're down to a market value of about $2.3 billion. So the exposure there is pretty minimal this point and the average mark on that 2.3 billion is in the range of 50 cents.
So if Goldman is marking their commercial loans at 50s, can someone please remind me how the Treasury/FDIC is making a valid case for these being valued at 84 cents? Also, it will be curious where the other banks disclose what their marks on these are - one would assume seeing how healthy the banking sector all of a sudden is, that Citi, BofA, JPM et al are all marked at 50 as well.
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Im extremely curious as to why FICC had such outsized profits compared to equities and currencies and commodities. They are all volatile lately so dont give me this "wide spreads" bllshit. Was AIG unwinding massive strucutural trades at ridiculous prices or not?
Viniar denied there was any AIG-PnL in the FICC #. I kinda have a hard time believing that. He kept pointing to good volume and wider spreads in "vanilla" FICC trading products. I don't see it, though. The results in equities are more like I'd expect. And spreads in equities have gotten wider! But revs were still down huge in that "vanilla" product.
Something doesn't add up.
The Meredith Q&A is pretty funny. I think Bloomberg lost it's way at the beginning.
CNBC Rick Santelli reported this AM that Goldman changed their reporting period from a 3 month quarter to a 4 month quarter. If true it changes the picture. Any idea if it is true?
ella
Meredith is dreamy. I'd have her over to the coral reef anytime.
Tylor don't get all excited about what GS said cause it doesn't make any sense.
Bottom line: the GS spokesman says they have 8.5 billion in 'market value' CRE exposure which they are 'marking' to the high 50's.
Can that really be true? I doubt it. No one is that stupid. Are they?
The bulk of GS profits had come from AIG transfer payments (the theft from taxpayers AIG 100% payouts funded via bailout money that saw GS as one of the largest recipients). Most of the AIG effect was in December. For the first quarter, the total A.I.G. effect on earnings was, in round numbers, zero.
It seems that GS is moving from a December to a quarterly calendar. Meaning their latest Q is January thru March.Goldman’s 2008 fiscal year ended Nov. 30.
But what of December, with all the AIG money and the comparison to the strong December 2007 and all?
This leaves December as an orphan month, one that will be largely ignored. In Goldman’s news release, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ending in February.
The orphan month featured — surprise — lots of writeoffs. The pre-tax loss was $1.3 billion, and the after-tax loss was $780 million.
Would the firm have had a profit if it stuck to its old calendar, and had to include December and exclude March?
Unbelievable!!
The boys also made money by charging counterparties to let them out of losing interest rate swaps. Plenty of pensions, localities, and others were sitting on the losing side of interest rate swaps, and paid to get out.
every one seems confortable with 163 billion usd set aside as legacy (for whom)? What are 5 billion usd capital increase going to produce when compared to a trillion usd BS?
Tear 1 and tear 2 in excess of basil ask the bond market ask the inter bank what kind of reading they are making.
Sorry it is full crap.
Possible formation of Sheer Descent Waterfall lacking spillway support pattern.
Anonymous 9:56 -- so Goldman is a direct beneficiary of Indianapolis Water Authority, Philadelphia Gas Works et al? Amazing.
All this grandstanding from GS just doesn't add up. I think we have a "consensus" that there's some funny business going on here.
Mmmmmm...let me see. When did Goldman start marketing its credit opportunity fund citing the very attractive pricing of leveraged loans at 65 cents. Oh right...just when they were massively reducing their book.
Funny how that works
http://norris.blogs.nytimes.com/2009/04/14/the-case-of-the-missing-month/
"So if Goldman is marking their commercial loans at 50s, can someone please remind me how the Treasury/FDIC is making a valid case for these being valued at 84 cents? Also, it will be curious where the other banks disclose what their marks on these are - one would assume seeing how healthy the banking sector all of a sudden is, that Citi, BofA, JPM et al are all marked at 50 as well."
are GS positions HFS or HFI?
also might depend on what type of loans they have left on their books after all those sales,..are they left with the junk they couldnt offload?
"So if Goldman is marking their commercial loans at 50s, can someone please remind me how the Treasury/FDIC is making a valid case for these being valued at 84 cents?"
Well, if a bank took purchase accounting marks on an acquisition (WFC/WB) they marked billions in loans down to zero...obviously, that's overly conservative, as there is some value in MBS...they take those loans marked to zero and sell them via the ppip and get maybe 80c on the dollar...and that's pure gravy.
GoldmanSachs666 is a dis-info site put up by Goldman, to tell us all the obvious facts, that we already know, thereby distracting us from the real conspiracy of GS crashing the market in 08!
Here is how I see it.
1. GS shorts the ABX(subprime) in 07. Makes a Billion or 2. Sends a ripple in the markets.
2. GS men at the Exchanges raise margin requirements forcing massive liquidation in JULy 07, not to mention cornering the oil market.
3. GS men at the SEC raise margin in 08, lower regulation increasingly over entire tenure.
4. There man Hank Paulson took Lehman in the other room, executation style. That really got things rolling (downhill)
5. Then, GS influence at Mood'yS(warren buffet) slashed AIG rating forcing them to find Billlions overnigth,
6.Then Hank Pauslon shows up with his $700 Billion ransome note. After stock markets crash around the world for 10 days, congress gives the big five banks their money.
7. Jim Cramer, former partner of GS, after watching the market crash for 10 days, tells America to sell everything. If we see a rally this year, you know Cramer is in on it
8. Rubin was a trojan horse on Citi's Board, encouraging them to get long and heavy in realestate.
9. AIG and Citi were made fall guys from the beginning, "to big to fail" was the plot
10. It's possible that GS even inflitrated Freddie and Fannie. It's obvious IndyMAc was a front to push liars loans.